The broad aim of this 5 year research study is to understand the neurophysiological basis of schizophrenia (SZ), using event related potentials (ERP) together with magnetic resonance imaging (MRI) and clinical measures. The auditory ERP measures span early information processing on through later, and more complex, cognitive processing associated primarily with temporal lobe structures. Our laboratory's basic neuroscience work posits a model of SZ pathology based on NMDA receptor-mediated failure of recurrent inhibition. We predict this deficit in inhibition will be manifested in the inability of SZ to follow and to entrain to gamma (-40Hz) frequency stimulation. Our modeling, based on this recurrent inhibition failure, further suggests that, at higher levels of processing, contextual categorization of stimuli as congruent or incongruent will be disturbed. This categorization failure will be tested using a series of ERP paradigms. At the level of sensory/echoic memory, we predict amplitude reduction in the mismatch negativity (MMN). At the level of attention and working memory, we predict asymmetry and reduction in central amplitude of the P300 elicited by infrequent, target tones. At the semantic level, we will use an N400 word pair paradigm to study contextual integration, contrasting automatic and controlled processes. 64 channel ERP recordings will yield more precise and extensive topographic information while high resolution MRI scans will define frontal, temporal, and parietal abnormalities and their association with ERP abnormalities. Extensive preliminary data lead us to predict a left less than right temporal asymmetry for both MMN and P300 in SZ, which will be anatomically linked to left superior temporal gyrus (STG) gray matter reduction and clinically linked to positive symptoms. We also will employ a novel statistical methodology, partial least squares, that enables firm probability bounds to be set on the associational structure between large variable sets obtained from relatively small number's of subjects, e.g., between MRI regions and neuropsychological test results. A subject population of male and female first psychotic episode patients and controls will be initially evaluated using ERPs and MRls and then retested 1.5 and 3 yr later. Our preliminary data predict many of the ERP and MRI manifestations of schizophrenia, especially the P300 and STG findings, will be present at the initial episode, but that SZ pathology will progress, especially gray matter volume reduction in posterior STG. Preliminary data also predict that many findings will be specific to SZ compared with first psychotic episode bipolar and unipolar subjects. We will study male and female chronic SZ with a more extensive battery of ERPs (including the N400 and an expanded gamma protocol) and with neuropsychological tests keyed to possible frontal and temporal lobe dysfunction. We will retest chronic SZ 1.5 and 3yr later; predicting that progression of abnormalities will be less than in the first episode SZ.